Zimbabwe Revenue Authority (Zimra) has slapped OK Zimbabwe Limited, the nation’s largest supermarket chain, with a hefty civil penalty of US$2,054,250 for alleged breaches related to the Fiscal Data Management System (FDMS), further complicating the retailer’s already fragile financial standing.

The FDMS is designed to enhance tax compliance by mandating retailers to connect their point-of-sale (POS) systems directly to Zimra’s servers, allowing for real-time transaction monitoring. According to OK Zimbabwe’s financial report for the year ending March 31, 2025, the fine was calculated based on 914 tills over a 90-day period starting January 23, 2024.

In a statement, OK Zimbabwe confirmed, “Zimra issued a civil penalty order amounting to US$2,054,250 under Section 81B and the First Schedule of the Value Added Tax Act (Chapter 23:12).”

However, OK Zimbabwe is contesting the penalty, stating it had been actively engaging with Zimra during the FDMS rollout but faced unexpected technical difficulties, which were communicated to the tax authority. The retailer claims it successfully integrated the FDMS in December 2024. They also challenged the legality of the penalty, citing the lack of a formal “show cause” notice and disputing the tally of tills used in calculating the fine. An appeal has been submitted to the Commissioner of Domestic Taxes, and the company awaits a response.

This penalty weighs heavily on OK Zimbabwe, which currently faces a strained financial position. The company’s current liabilities stand at US$44.2 million, while current assets total US$25.5 million, meaning it holds only 57 cents in assets for every dollar of short-term debt. To address this, OK Zimbabwe has launched a restructuring plan that includes raising US$20 million through a rights issue, selling assets valued at US$10.5 million to reduce debt, and implementing cost-saving measures such as reducing staff and closing underperforming outlets. These closures include the Borrowdale and Avondale Food Lovers Market stores, all Alowell shops, and a branch in Banket. Capital expenditures have been limited strictly to essential maintenance and critical upgrades.

OK Zimbabwe attributes its financial woes to a mix of factors: poor decisions by former management, exchange rate fluctuations, heavy taxation, competition from the informal sector, and unreliable utility services. Despite these challenges, management forecasts sufficient liquidity to meet obligations through at least September 2026, assuming the restructuring plan proceeds smoothly.

 

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